West Africa’s extractives sector

12 Sep 2018

Africa

Creating a Compliant Organisation

Delivering Growth and Opportunity

West Africa’s extractives sector: mapping the stakeholder landscape

The installation of a new petroleum minister after the sudden removal of his predecessor. A phone call from the presidency reneging on a deal signed at the ministry. A new cabinet put in place after an election. A local community protesting near a production site. Investors in West Africa face a range of stakeholders with the power to impact their ventures for better or for worse. To succeed, investors must comprehend these players’ identities, interests, levels of influence, and attitudes, and how they may change over time. Only then can they design engagement strategies that will facilitate buy-in from key interlocutors, and that can be adapted as situations change and individuals come and go.

Three key takeaways for successful stakeholder mapping

Control Risks has assisted a number of companies in mapping out the stakeholders that could affect their investments in a range of West African countries, and designing strategies to ensure broad buy-in and ultimately a success venture. With looming elections in several West African countries likely to bring shifts in power dynamics, here are our three key takeaways for successful stakeholder mapping:

1. It’s not just about the org chart

Stakeholders go far beyond the formal decision-makers mapped out on a government’s organisational chart. Formal entities, such as the energy ministry, state-owned energy companies, dedicated presidential units, and other ministries involved in contractual processes, will inevitably be primary interlocutors around formal licence awards and other required approvals. However, informal actors, such as members of a ruling family, external advisers and other ministers, sometimes exert greater influence over oil and gas decisions – First Lady Hinda Déby, for example, is a key player in the Chadian oil sector.

Meanwhile, other informal actors may not have specific oversight of oil and gas, but can act as gatekeepers to key decision-makers. Outside ruling circles, some actors can positively or negatively influence a venture’s success. Foreign partners may provide leverage, and some foreign figures are known to have the ear of presidents in the region. Local law and consulting firms – often well plugged in to governing structures – can also be retained as advisers; lawyer Adama Kamara, for example, is a key intermediary for several companies in Côte d’Ivoire.

Moreover, local communities require careful engagement in light of their ability to mobilise for – but especially against – companies and projects. Labour unions, local NGOs and local media outlets (especially radio, which remains the main source of information outside of cities) also need to be carefully considered. Finally, other businesses and business partners, depending on their standing in-country, can undermine or benefit another company’s reputation and operations.

2. Stakeholders compete with one another

Beyond identifying relevant stakeholders, understanding their relations and relative influence is central to any successful stakeholder mapping exercise. Competition over the strategic oil and gas sector is common in West African countries, notably between the presidency, the energy ministry and state-owned energy companies. Meanwhile, in countries such as Sierra Leone, federal, provincial, local and chieftaincy authorities periodically compete over strategic decisions.

As a result, conversations and agreements secured with one set of stakeholders – for example, over signature bonuses or fiscal terms – may be revisited entirely with another. Companies perceived to be siding with one specific minister or adviser also risk antagonising rival powerbrokers, possibly jeopardising broad government buy-in. In the worst cases, companies seen as too closely associated with a minister may even face repercussions from their rivals: oil and gas companies in Equatorial Guinea, for example, have struggled to navigate the sibling rivalry between oil minister Gabriel Lima and Vice-President Teodorin Obiang.

3. The only constant is change

Cabinet reshuffles are frequently used to garner support, marginalise challengers or reward supporters. Power alternations after elections can also fundamentally change the governing landscape. In Côte d’Ivoire, amid tensions within the ruling alliance, Democratic Party of Côte d'Ivoire (PDCI) member Noël Akossi Bendjo in early 2018 was removed as head of state oil refinery SIR. In Gabon, Etienne Ngoubou in early 2017 was dismissed from his post as petroleum minister overnight and imprisoned on corruption charges.

When interlocutors change, former discussions may need to be held again, and agreements revisited. Such shifts mean that some investors may prefer to nurture relations with less influential technocrats who are more likely to survive a cabinet reshuffle or a change in administration. Others will seek to anticipate changes, for example through the use of scenarios, to identify the stakeholders who will retain – or grow in – influence. They can then start to manage relationships early on, phasing their engagement strategies in line with expected political shifts.

Stakeholder mapping throughout the project lifecycle

Whether investors want to identify the best individuals to engage in Senegal ahead of a market entry; need to comprehend who is driving the latest regulatory changes in Guinea, seek to identify the best local partners to help your venture succeed in Niger, need help navigating a local content compliance drive or a security incident in Chad, or want to prepare for a new administration in Côte d'Ivoire after 2020, stakeholder mapping should be central to their operations at every stages of the business cycle.

Key players in the oil and gas sector in West Africa

Ndiaye leads COS-PETROGAZ at the Ministry of Petroleum and Energy. The committee was inaugurated in 2016 to “assist the president in the definition, supervision, evaluation, and implementation of state policies with regards to the development of oil and gas projects”, and has since emerged as a key forum for policy discussions on the sector. Having qualified as a mining engineer, Ndiaye has a 40-year career in the extractives sector, having headed state-owned mining company MIFERSO and state-owned oil company Petrosen. He is close to President Macky Sall, whom he recruited at Petrosen and later worked for as special adviser at the presidency, but is respected across the political class.

Guinea: Diakariaou Koulibaly, minister in charge of hydrocarbons

Koulibaly in May was appointed minister of hydrocarbons. He previously headed the National Petroleum Office (ONAP), the state structure in charge of implementing policy and regulations in the oil and gas sector, and which notably manages contract negotiations and signatures with foreign investors. Koulibaly has played a leading role at ONAP, and is perceived as President Alpha Condé’s right-hand man in the oil sector, in charge of implementing the president’s policy guidance and instructions regarding specific contracts.

A former director of petroleum products at the Ministry of Trade, Koulibaly has sufficient technical experience to advise the president on oil matters. However, he is also a staunch supporter of the president and a visible member of Condé’s Rally for the Guinean People (RPG) in the north-east, having campaigned for the party ahead of the 2018 local elections. The politicised nature of his appointment means that Koulibaly would be unlikely to retain his post in the event of an opposition victory in 2020.

Kamara is the government’s go-to lawyer on oil matters. He has represented Côte d’Ivoire in its maritime border dispute with Ghana, defended state oil company Petroci in court, and advised the government during negotiations on the attribution of oil blocks to foreign companies. He maintains strong ties to the ruling Rally of Republicans (RDR) and its key powerbrokers – including former energy minister Adama Toungara, who retains influence over the sector – and Coulibaly, whom he advises on oil matters. Kamara has also acted as an intermediary for foreign companies in the energy sector, such as African Petroleum, the first company to land exploration permits in 2011 under President Alassane Ouattara. He, and his law firm ADK, are likely to remain important players in the oil sector, though could lose influence in the event of an RDR defeat in the 2020 polls.

Niger: Foumakoye Gado, minister of petroleum

Gado has served as oil minister since April 2011, though his portfolio has at times also included mining and energy. A physicist by training, he had already served as mining minister in 1993-94 when President Mahamadou Issoufou was prime minister. Gado was a founding member of Issoufou’s ruling Nigerien Party for Democracy and Socialism (PNDS), and has served as its secretary general since the party’s creation in 1990. Part of Issoufou’s inner circle, Gado is considered to be one of the president’s most loyal lieutenants. His experience in the sector and proximity to the president have seen him maintain a strong grip over the oil sector, notably thanks to loyalists such as his powerful director of hydrocarbons, Adolphe Gbaguidi. Aged 57, Gado is likely to retain his portfolio until the 2021 presidential election.

Chad: Hinda Déby, First Lady

Hinda Mahamat Abderahim Acyl married President Idriss Déby in October 2005, in a bid by Déby to secure support from Hinda’s clan in the rebellion-prone Ouaddaï region in the east. She has since emerged as one the president’s closest and most influential collaborators, frequently accompanying her husband to official functions and overseeing strategic sectors. Most notably, she has gradually gained control over the oil sector by placing relatives and loyalists in influential sector positions, including presidential advisers, ministry officials and executives at national oil company SHT. These moves have at times frustrated foreign investors, who have seen technical experts increasingly removed in favour of political or personal appointees. Hinda is likely to retain influence so long as Déby remains in power. However, Déby’s death or incapacitation in office could jeopardise her influence.